WASHINGTON — Apparel employment, which has been on the decline for three decades, reached a milestone in April, dropping below 500,000 for the first time on record, according to the Labor Department’s employment report released Friday.
This story first appeared in the May 5, 2003 issue of WWD. Subscribe Today.
Last month alone, apparel manufacturers slashed 7,000 seasonally adjusted jobs from payrolls to employ 495,000 workers. Compared with April 2002, the apparel sector lost 28,000 workers. The government started keeping such job statistics in 1939, when there were 930,000 apparel jobs.
Apparel employment, on a seasonally adjusted basis, peaked in May 1973 at 1.445 million, according to Labor statistics, and has lost nearly 1 million workers in the past 30 years.
“For the past two decades, the U.S. has loosened its trade restrictions and a steady flow of apparel manufacturing has left this country and headed to Latin America, China and [sub-Saharan Africa],” said Steve Spiwak, an economist at Retail Forward.
A string of free-trade pacts and preferential agreements with North America, Latin American, Caribbean and sub-Saharan African countries have allowed for duty- and quota-free treatment on apparel assembled abroad and shipped back to the U.S. Low-cost labor has also lured apparel production to all corners of the world.
Mark Levinson, chief economist at UNITE, said 1994 — the year NAFTA took effect — is the dividing line between a slight decline in apparel employment and a rapid acceleration in employment declines.
From December 1985 through December 1994 — a 108-month period — the apparel industry lost 142,000 jobs, which was a 12.7 percent decline, due primarily to a shift to offshore production, according to Levinson. The textile industry lost 16,000 jobs during that same period, or 2.3 percent.
In comparison, from December 1994 to April 2003 — a 100-month period — the apparel industry lost 480,000 jobs, which marked a 49.2 percent decline, he said. The textile industry lost 273,000 jobs, or 40 percent of its workforce, during that period.
“I attribute this huge decline after NAFTA took effect to that agreement, as well as the extension of the NAFTA model,” Levinson said. “While these industries may have been declining before 1994, they were never in the crisis they are in today.”
“The accelerated pace of industry job loss in April appears to reflect an end in the relative stability in the industry over recent months as the glut of cutthroat-priced imports and weakening demand force U.S. industry producers to begin reducing current massive levels of unused capacity and jobs,” said Charles McMillion, chief economist at MBG Information Services.
He also noted that the job losses will likely remain near these levels for some time.
The textile industry lost another 6,000 jobs last month to employ 409,000 people. Compared with April 2002, the textile sector lost 27,000 people.
Meanwhile, department stores slashed 34,000 from payrolls in April, while employment in the sector fell by 101,000 jobs year-over-year, at the same time the overall unemployment jumped to 6 percent.
It was the biggest monthly seasonally adjusted drop in department store employment since May 2000. Department store employment stood at 2.474 million in April.
Apparel and accessories stores bucked the monthly trend and added 3,000 jobs to payrolls in April to employ 1.16 million workers. But employment was down by 9,000 jobs against April 2002.
General merchandise stores, including department stores and discounters, lost 29,000 jobs last month to employ 2.825 million. General merchandise stores employed 90,000 fewer people compared with April 2002.
“The decline in department store employment reflects department store business, which has consistently seen a decline in top-line sales growth for some time now,” said Carl Steidtmann, chief economist at Deloitte Research. “The employment numbers are catching up with reality.”
He noted that retail employment has been contracting since the first of the year and expects to see more consolidation and bankruptcies in the sector.
“You can’t have a decline in sales sustained as long as it has been in the department store sector and support capacity that still exists in this sector,” said Steidtmann.
Rosalind Wells, chief economist at the National Retail Federation, attributed the big department store job losses to the “sluggish economy and slowing retail sales.”
She said a bounce-back in consumer confidence, a stronger stock market and declining energy prices are signs of improvement, although she doesn’t expect the employment numbers, which are a lagging indicator, to improve dramatically in the very near future.
In the overall economy, U.S. businesses cut 48,000 jobs from payrolls in April. They have slashed half a million jobs in the past three months, as the number of unemployed workers surged to 8.8 million.